Related topics

Determining When to Use Midquarter Convention

Midquarter Field

Midquarter Convention

Midquarter Applicability Report

Midquarter Applicability Report Window

Performing a MACRS Convention Switch

How do I change the midquarter convention for existing assets?

The MACRS Convention Switch evaluates all selected assets in the current Asset List and determines which assets qualify for a switch from either the midquarter to the half-year averaging convention, or from the half-year to the midquarter averaging convention (depending on which convention you specify).

If you have depreciated qualifying MACRS property under the wrong averaging convention, you can perform a MACRS Convention Switch to recalculate depreciation for all qualifying assets placed in service for any specified year. Qualifying assets are 3-, 5-, 7-, 10-, 15-, 20-, or 25-year MACRS property, and have a depreciation method of MF, MA, MT, MI, MR, RH, AD, or AA. In addition, qualified property includes those property type R assets that do not use the midmonth convention.

You can select individual assets you want the system to evaluate, or you can create a group and select all assets in that group. However, because the system evaluates the assets for you, you can select all assets in the All Complete Assets group, and the system switches only the qualifying MACRS assets. This is the most efficient and accurate way to perform this function.

The MACRS Convention Switch affects all asset extension numbers within a System Number. This means that if you select an asset with an extension number indicating a disposed asset, the system recalculates the gain/loss amounts. However, you can quit the function before recalculating.

If you select an asset with extension numbers indicating a transferred asset, the system recalculates depreciation for only those extensions created within the System Number. You must select and perform the MACRS Convention Switch on all new System Numbers created during the transfer, even if the new System Number was created in another company. It is important that you select all assets in all companies involved in asset transfers. This way, you are sure not to miss any affected assets, which might result in either overstating or understating depreciation amounts.

Note: Because the nature of this function requires numerous complex calculations, this option can be time-consuming, depending on the number of assets you select.

To perform a MACRS Convention Switch
  1. Select the assets on which you want to perform a MACRS Convention Switch.

Tip: We recommend you select all assets. In the Asset List, select the All Complete Assets group, and then either select Edit/Select All from the menu bar, or select the Select All box in the upper-left corner of the Asset List.

  1. Select Depreciation/MACRS Convention Switch from the menu bar. The system displays the MACRS Convention Switch window.
  2. Complete the MACRS Convention Switch window, then select OK. The system performs the switch on the appropriate assets, then returns to your previous window.

Note: If you have additional assets to enter for the year, be sure to change your default convention on the Book Overrides tab of the Edit Company window.